The official line on Wall Street is that an abundance of caution among clients in the face of uncertainty, especially around the direction of interest rates, has depressed trading volumes, volatility and revenues. A similar tale appears to be unfolding at banks themselves.

US banks now hold more Treasurys than they have since 1997

In the first quarter, the collective holdings of Treasurys by US banks grew by 23%—the biggest shift since the financial crisis and the fifth biggest on record, according to the quarterly banking report released by the Federal Deposit Insurance Corp. Wednesday. As a result, banks now hold more Treasurys than they have since 1997, even after adjusting for inflation.

That wariness probably signaled that banks, too, were caught off guard by a drop in long-term interest rates, as opposed to widespread expectations that they would rise. And it occurred as deposits continued to swell—up 1.1% from the previous quarter—while loan growth once again failed to keep a similar pace, at just 0.5%.

Banks' cautious stance also was reflected in continued growth of the reserve coverage ratio, which compares loan-loss reserves to noncurrent loans. Both sides of the ratio have been coming down more or less steadily for the past few years—but banks have brought down reserves more slowly of late. Because doing so adds to profits, this means banks are either running out of room in terms of releasing reserves or are positioning themselves to be prepared for poorer loan performance.

That isn't to say the FDIC report suggests banks have a dire outlook of the near future. But the conservatism stands in contrast to the exuberance of investors in 2013 who pushed the KBW Bank Index up 35%.

Those investors will likely have to wait longer for earnings that will justify further gains in the wake of last year's outperformance.